Action against price-gouging businesses already under way

The Competition Commission’ could soon be dealing with a potential influx of new cases, after Trade and Industry Minister Ebrahim Patel yesterday announced that 11 businesses were already under investigation for contravening the newly implemented regulations banning price hikes during the Covid-19 disaster.

Last Thursday, the minister gazetted a set of new regulations and directions designed to – among other things – “protect consumers and customers from unconscionable, unfair, unreasonable, unjust or improper commercial practices during the national state of disaster”.

These included a ban on exorbitant price hikes of various products and services, including basic food and consumer items as well as hygiene and medical supplies.

The new regulations and directions provide that the Competition Commission must investigate any contraventions, and the minister revealed yesterday that there were already 11 on its agenda.

Speaking at a briefing by the Inter-Ministerial Committee dealing with Covid-19, Patel said 11 firms had been “found to be selling products like face masks, hand sanitisers and others for high prices and abusing the situation”.

He also said  more businesses were now being investigated and that prosecutions were expected to follow.

The Competition Commission did not respond to questions from The Citizen yesterday but Professor Willem Boshoff, of Stellenbosch University’s Centre for Competition Law and Economics, said the commission was already under pressure and under-resourced, but that it would likely “prioritize cases like these in the current environment”.

He outlined different ways in which the commission might try and hem in these investigations, saying, “These regulations deal with dominant firms, which are typically firms with large market shares. So the commission will probably zone in on big companies and then investigate them as a whole,” he said.

He said it would be difficult to enforce “full-time monitoring” where every single store across the country was individually visited and their prices checked.

“But that’s not how these cases work anyway,” he said.

Boshoff said investigations might take place “after the fact”.

“It would take a longer time but allow them (the commission) to do it within the confines of the Competition Act,” he said.

Boshoff said the new regulations and directions were a sign of the seriousness with which government was taking the situation.

“The whole idea of challenging excessive prices is only something that some jurisdictions do and in South Africa, we haven’t seen a lot of these cases because they’re difficult cases to run and you have to identify an appropriate benchmark,” he said. “These regulations and directions literally say that if you can’t justify a price change, it’s considered to be excessive. And that’s a very strict standard by which to evaluate these cases”.

The Council for the Advancement of the South African Constitution’s Lawson Naidoo said certain rights were being curtailed during this time and could not be enjoyed “as they would be in a normal situation”.

“But what government announced on Monday night was a series of economic measures to try and alleviate the impact that is going to have on people,” he said.

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